LITTLE ROCK — The Arkansas Supreme Court on Thursday upheld a $48 million award to farmers in a lawsuit over tainted rice, affirming a circuit judge’s ruling that a 2003 law that caps punitive damage awards in civil cases at $1 million is unconstitutional.
In a unanimous decision, the high court said Amendment 26 gives the Legislature the power to enact measures to prescribe the amount of compensation to be paid employees for injury or death.
The 2003 Civil Justice Reform Act is unconstitutional under Amendment 26 because it “limits the amount of recovery outside the employment relationship,” the court said in the opinion written by Justice Courtney Goodson.
The Legislature passed the law after a jury awarded a $78 million judgment against a Mena nursing home in a resident’s death. The state Supreme Court reduced the award to $26 million in May 2003.
The law limits punitive damage awards to $250,000 or three times the amount of compensatory damages, with a maximum award of $1 million.
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Last year, Lonoke County Circuit Judge Phillip Whiteaker declared the cap unconstitutional in his ruling awarding rice farmers $42 million in punitive damages and about $6 million in compensatory damages in a lawsuit farmers filed claiming their crops were tainted by genetically modified rice produced by Bayer CropScience.
Lawyers for Bayer CropScience asked the state Supreme Court in October to reverse Whiteaker’s ruling, arguing that the Civil Justice Reform Act was constitutional.
Donald Scott of Denver, Colo., attorney for Bayer CropScience, said in oral arguments it’s the Legislature’s job to determine penalties.
Scott Powell of Birmingham, an attorney for Randal Schafer and 11 other rice farmers, argued that Whiteaker’s ruling was correct, saying that compensatory damages are for recovery of injuries, while punitive damages are a penalty for conduct. Powell said Thursday he was pleased with the Supreme Court’s ruling.
“It’s a great day,” he said Thursday. “What the Supreme Court said was that the cap that was placed on punitive damages violated the constitution, and a clear reading of the constitution makes it pretty clear that it did.”
Powell said the court “looked closely at the (state) constitution … and came to the unanimous conclusion that constitution was clear in what it had to say about these issues.”
The ruling, Powell said, “is a wonderful victory for farmers and small business and big business.”
The attorney said the farmers have “really struggled over the last five years with the (rice) market losses” because of the genetically engineered rice.
“They’re totally innocent, so it’s a great victory for them,” he said.
Randy Zook, president and CEO of the State Chamber of Commerce/Associated Industries of Arkansas, said the ruling was a setback for efforts to create a business-friendly environment encouraging job-creating entrepreneurs and business leaders.
Zook said the state chamber worked with a number of groups and lawmakers to get the legislation passed.
“The uncertainty presented by the potential for unlimited damage assessments will discourage growth and expansion of Arkansas businesses,” Zook said. “The cost of this ruling will be significant.”
Scott did not immediately return a call seeking comment Thursday.